Funding secured

MARKETS

• Green everywhere: The S&P is only 0.5% away from reaching the all-time high. The VIX (a measure of volatility) is the lowest it's been since January.
• Turkey: With the lira near record lows and tensions with the U.S. ramping up, central bankers are being pressured to raise interest rates.

AUTO

Elon Musk Goes Public About Going Private

Just as we were finishing up lunch yesterday, the tornado that is Elon Musk ripped through the business world with eight words, three digits, and one symbol.

There were a few minutes of chaos. At first, it wasn't clear whether this tweet was sent from a hacker, from Elon himself, or from a very sarcastic Elon (420 is, after all, an infamous number...and he's joked about bankruptcy before).

But as it became clear he could be serious about taking Tesla private (his follow-up tweets suggested as much, though a final decision hasn't been made), a few things happened:

Shares rose more than 8% before trading was temporarily halted (they closed up nearly 11%).

Questions were asked:

• Is this...kosher? Legally? Well, in 2013 the SEC said companies can disseminate info on social media "so long as investors have been alerted."
• Did he really "secure" funding? At $82 billion including debt, this would be by far the largest leveraged buyout in history. Musk owns ~20% of the company, so he'd have to secure more than $50 billion to complete the deal.

Step inside the mind of Elon

Sure, we'll never know what's really going on in there, but Musk did release a memo explaining his reasoning:

• Eliminating distractions: "As a public company, we are subject to wild swings in our stock price that can be a major distraction for everyone working at Tesla..."
• Breaking free from short sellers: "As the most shorted stock in the history of the stock market, being public means that there are large numbers of people who have the incentive to attack the company."
• Executing a long-term mission: "SpaceX is a perfect example: it is far more operationally efficient, and that is largely due to the fact that it is privately held."
• Bottom line: "I'm trying to accomplish an outcome where Tesla can operate at its best, free from as much distraction and short-term thinking as possible."

Looks like we'll be writing plenty about this story as it unfolds in the coming days/weeks/months.

+ There's more: If you can stomach some more Tesla news today, you should know that Saudi Arabia's sovereign wealth fund built a ~$2 billion stake (3-5%) this year, per the FT.

SOCIAL

Snap’s Big Question Mark

Snap (+0.23% after hours) isn't quite sure what filter to use after its most recent quarterly update. Will it be vomiting rainbows or sad puppies?

Let's take a look at the second-quarter books:

• Snap lost 14 cents a share, which was narrower than the 17-cent loss analysts expected.
• Revenue totaled $262 million, beating forecasts and increasing 44% annually.

BUT it wasn't all smiles...global daily active users totaled 188 million, missing expectations and shrinking ~1.6% from last quarter. It's the first time Snap has lost daily users quarter-over-quarter since it was founded in 2011.

• But on the other hand, the average revenue for those users was $1.40, up 34% from last year.

Bottom line: Revenue may have grown, but Snap's lackluster user stats are just the latest in a summer of sluggish social media growth (joining Facebook and Twitter). Is that saturation we smell?

MEDIA

Katzenberg & Whitman: The New Mr. and Mrs. Incredible?

And the award for Outstanding Performance by an Ensemble goes to...the all-star cast that raised $1 billion for NewTV, a mobile-video startup founded by Hollywood vet Jeffrey Katzenberg with Meg Whitman as CEO (you may remember her from HP).

*Sniffles* NewTV would like to thank everyone who believed in it from the start...like its powerhouse list of investors:

• Alibaba, Goldman Sachs, JPMorgan, Madrone Capital Partners (the family fund of Walmart's founders)...and all six major Hollywood studios.

What's the deal with NewTV?

It aims to build an app-based subscription service with top-notch programming created specifically for your phone. And the videos? They're formatted in "bite-sized" chunks of ~10 minutes or less.

What makes it different: "Bite-sized" video isn't new (read: IGTV, YouTube, Snapchat), but NewTV certainly is. It's focused on Hollywood-level, multimillion dollar production value...not low-budget horror flicks shot in your garage with the OG iPhone.

And NewTV's investing a huge chunk of that initial $1 billion in commissioning and licensing content from the very Hollywood studios backing it.

• Whitman: "We have to launch with a rich immersive site. Frankly, no one studio can do this on their own."

While we're in Hollywood...

Disney (-0.65% after hours) missed expectations on both earnings and revenue for its fiscal Q3, but management appeared confident about a double-digit annual increase in quarterly profit.

But the question on everyone's mind? Now that Disney shareholders approved its $71.3 billion bid to buy Fox's entertainment assets, what'll it do with them?

• CEO Bob Iger: "We are more enthusiastic about the 21st Century Fox acquisition than ever, and confident in our ability to fully leverage these assets along with our own incredible brands, franchises and businesses."

And worth noting...Disney's studio revenue grew 20% annually to $2.88 billion thanks to blockbusters like Avengers: Infinity War and Incredibles 2.

HEALTHCARE

Icahn Dips His Quill in Some Ink

It may not be Festivus for another few months, but activist investor Carl Icahn is already airing his grievances. He published a letter blasting health insurer Cigna's (+0.22%) pending $52 billion acquisition of pharmacy benefits manager Express Scripts (+2.76%).

Remember: Icahn has built a stake in Cigna (~0.56% of shares, worth roughly $250 million) with the intention of voting against the deal—and urging others to do the same.

Let's crack open the letter

It's harsh. So why is Icahn so opposed to the acquisition?

• Regulatory risks: The Trump administration "has specifically targeted PBMs as the part of the supply chain that is overearning relative to the value they produce."
• Price: "We cannot fathom how Cigna's management and board saw fit to pay an all-time high price for Express Scripts with so many unknown risks lying dead ahead."
• New competitors: "Amazon...will be an existential threat to PBMs like Express Scripts, possibly challenging their very existence."

Bottom line, courtesy of Icahn: "Purchasing Express Scripts may well become one of the worst blunders in corporate history."

Set a reminder: The shareholder vote is August 24.

CYBERSECURITY

Hacking Elections Is Like Stealing Candy From a Baby

So much for a high-stakes game of knockout back in the day. Now, kids are busy hacking elections.

Okay, we'll explain. At Las Vegas cybersecurity conference DEF CON this week, children 8-16 years old are being tasked with hacking replicas of state election websites with voter registrations.

• "Unfortunately, we're at a place where tampering with elections could be child's play," said program founder Nico Sell. Niiice.
• So why kids? Per Sell: "We couldn't have the same competition for adults because it would be way too easy."

Zoom out: The exercise is meant to show just how vulnerable election websites can be to hackers—not just bad Russian actors, but even those without a driver's license.

Interesting timing, too...West Virginia will allow troops serving overseas to vote in upcoming midterm elections using a smartphone app. The app (from a company called Voatz, unsurprisingly) uses facial recognition and blockchain tech to keep ballots anonymous and secure. Don't tell the 5th grade class...

+ All the results from last night's special election in Ohio and primaries in Kansas, Michigan, Missouri, and Washington.

WHAT ELSE IS BREWING

• Papa John's (-10.52% after hours) missed on nearly all major metrics for Q2, blaming its troubles on the recent scandals involving founder John Schnatter.
• U.S. billionaire Stan Kroenke has acquired full control of Arsenal, a major soccer club in London.
• President Trump met with over a dozen CEOs at his Bedminster golf course last night. Guests included leaders from Boeing, Pepsi, FedEx, Mastercard, and more.
• Aluminum maker Alcoa (-1.76%) has filed for waivers from U.S. tariffs of 10% on the metal.
• Ford (+0.55%) executive Prakash Patel left the company after allegations of inappropriate behavior. It's the second time this year a leader's left Ford due to misconduct.

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